Oil field giant pares losses in 3Q
Schlumberger, the world’s largest oil field services company, significantly pared its losses in the third quarter in a sign of a slowrecovery from the coronavirus-driven oil bust.
The Paris company with principal offices inHouston lost $82 million in the quarter compared with a second-quarter loss of $3.4 billion and an $11.4 billion loss in the same period a year earlier. Revenue declined 38 percent to $5.3 billion from $8.5 billion in the third quarter of 2019. It was off 2 percent from the second quarter, the first full three-month period affected by the pandemic, which swept the U.S. in March.
Schlumberger CEO Olivier Le Peuch on Friday said he believes the oil and gas industry has hit bottom and will begin a recovery during the next two quarters. He acknowledged, however, that a recovery would be tenuous as second and third waves of the coronavirus break out around the world.
“Improving demand recovery supported by various government measures to stimulate economic activity and continued supply discipline from the major producers set the conditions for a long-term activity rebound,” Le Peuch said in a statement. “However, while the global lockdowns are evolving and vaccine development is pro
gressing, the near-term recovery remains fragile owing to potential subsequent waves of COVID-19 that could pose a significant risk to this outlook.”
Oil field services companies, such as Schlumberger, Weatherford and Baker Hughes, have been particularly challenged as contract work for drilling and extracting oil evaporated during the pandemic. Schlumberger this year closed 150 North American facilities, slashed employee pay and made plans to cut more than 21,000 workers — or 1 in 5 workers — to weather the economic downturn. Schlumberger on Friday
said it isontrack to cut nearly $1.5 billion from its business this year.
As crude prices have climbed back to $40, many oil and gas companies have restarted production on existing wells and are completingwells thatwere drilled butnever finished before the pandemic. That’sbeen a welcome sign for Schlumberger, which saw thirdquarter production revenue increase by 12 percent from the previous quarter. Schlumberger said it sawan uptick in well completion jobs in the Permian Basin of West Texas and the gas basins in theHaynesville shale of East Texas during the third quarter, which was partially offset by reduced drilling activity for new wells.
Schlumberger was awarded several contracts during the past quarter, mostly for international jobs. BHP Petroleum hired OneSubsea, a Schlumberger subsidiary, to engineer and construct a subsea boosting system to increase production from the deepwater Shenzi Field in the Gulf of Mexico.
Also during the third quarter, Schlumberger sold its U.S. fracking business OneStim to Liberty Oilfield Services in exchange for a 37 percent stake in the smaller company valued at about $448 million.
Shares of Schlumberger tumbled after the earnings report, falling $1.45, nearly 9 percent, to $14.97.